Cagle’s Inc. (CAGAQ:US), a poultry producer, won court approval to sell its assets for about $93 million to JCG Foods LLC, an affiliate of Koch Foods Inc.
U.S. Bankruptcy Judge Joyce Bihary approved the sale to closely held JCG, which is owned by Joe Grendys, chief executive officer and owner of Park Ridge, Illinois-based Koch Foods, according to court documents filed May 11 in Atlanta, where Cagle’s is based.
“The auction went very well,” bringing in about $12.5 million more than the original offer, Paul K. Ferdinands, a lawyer for Cagle’s, said in a telephone interview today. The auction success should make it so that “all the creditors are going to get paid in full,” Ferdinands said.
JCG Foods agreed to pay $49.7 million plus the value of inventory and accounts receivables, which stood at about $43 million as of Jan. 28, and minus post-bankruptcy payables and accrued expenses that totaled about $7.7 million, according to court documents.
“From a big-picture perspective, it went from about $80 million to about $93 million in overall deal value,” Ferdinands said. JCG will pay $69.5 million in cash and the rest in a promissory note bearing 8 percent interest, which will be guaranteed by Grendys and a $5 million portion by Koch Foods, the seventh-largest U.S. chicken producer by pounds.
‘Very Natural Fit’
“It’s a very, very natural fit for us,” Grendys said in a telephone interview today. The acquisition “strategically gives us more chickens to market, their sales are complementary to our current sales base and it gives us the ability to expand within our own customer base and sell more products with more volume to our current customers and new customers,” he explained.
Cagle’s sought court protection on Oct. 19, listing more than $50 million in assets and less than $50 million in debt in its Chapter 11 petition. Cagle’s assets include two processing plants, a feed mill and a hatchery. The company processes about 1.7 million chickens a week.
“We are going to invest in the infrastructure and immediately expand production,” said Grendys. “We can add about 1 million chickens a week at one of the operations. Our goal is to take it up over 2.7 million a week.”
The case is In re Cagle’s Inc., 11-80202, U.S. Bankruptcy Court, Northern District of Georgia (Atlanta).
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